Minneapolis-based food retailer and distributor Nash Finch Co has reported a 37% increase in comparable earnings of US$5.9m, or 48 cents/diluted share, in the Q1 ended 23 March 2002, compared with US$4.3m, or 36 cents/diluted share, excluding goodwill amortisation in the previous year.
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Earnings for the Q1 of 2001 were US$3.3m, 28 cents/diluted share, including goodwill amortisation.
Total revenues for the Q1 2002 increased to US$920.8m, versus year-ago revenues of US$904.9m. EBITDA grew to US$26.6m compared to US$24.9m in the prior year, representing 2.9% and 2.8% of sales, respectively.
“Our performance driven momentum continues despite a very challenging competitive environment,” said Ron Marshall, president and CEO. “This was the tenth consecutive quarter of year-over-year growth in comparable earnings reflecting earnings growth in each of our business segments as well as lower interest costs.”
“We are also pleased to announce,” Robert Dimond, senior VP and CFO added, “that we are increasing our earnings guidance for fiscal 2002 from that previously provided by five cents, to range between US$2.44 and US$2.49 per diluted share. This is an increase of 12-15% compared to earnings of US$2.17 per diluted share realized in 2001. Goodwill amortisation expense of 39 cents per share has been excluded from the 2001 earnings calculation in order to be comparable to the current year presentation.
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By GlobalData“For the Q2 2002, we expect diluted earnings per share to be in the range of 58 to 60 cents. This compares to second quarter 2001 diluted earnings per share of 53 cents, calculated on a comparable basis.”
Food distribution results
Q1 revenues for the food distribution segment totalled US$452.2m versus US$454.4m in the year-ago period, a decline was partially due to softer sales in the Southeast and Central regions as well as the planned rationalisation of certain unprofitable accounts. Segment EBITDA totalled US$14.7m, or 3.3% of sales, versus US$14.6m, or 3.2% of sales, in the prior-year period. Moreover, food distribution profits in the Q1 grew to US$12.1m versus US$11.9m last year. This underscores management’s effort to improve the efficiency, effectiveness and productivity of the company’s food distribution network.
Military segment revenues in the Q1 were US$230.8m compared to US$221.1m a year ago. EBITDA for this segment was US$7.5m in the Q1 of 2002 versus US$6.8m in the year-ago period, representing 3.2% and 3.1% of sales, respectively. Profits increased to US$7.2m versus US$6.5m year on year. The higher sales in the military segment resulted primarily from greater year-over-year exports to bases overseas. A significant portion of the sales increase in the Q1 represents shipments that normally would have occurred in the Q2. As a result, Q2 sales are expected to be proportionately reduced, making the overall sales outlook for the year relatively flat versus the prior year.
Retail results
In the Q1, revenues from corporate retail stores rose to US$237.8m versus US$229.5m in 2001. Retail segment EBITDA increased to US$12.2m, or 5.1% of sales, versus US$10.6m, or 4.6% of sales, in the prior-year period. Profits grew to US$8.6m, up from US$7m in the prior-year period. Same-store sales declined 0.8% year-over-year, reflecting continuing intense competitive activity.
Key retail events during the quarter included the following.
*New Buy n Save® extreme value food stores began operation during the quarter
*Nash Finch acquired a supermarket in Chilton, operating under the Econofoods® banner.
*AVANZA(TM), Nash Finch’s Hispanic format, opened the first store in Denver, Colo.
“The AVANZA effort is all about meeting the needs of an underserved and fast-growing marketplace,” Marshall explained. “We are pleased with our progress and enthusiastic about the future of our Hispanic format.”
Outlook
“We continue to produce solid returns that overcome the dual impact of a lagging economy and intense competition,” concluded Marshall. “We feel we have the plan and the solid platform that allows us to be optimistic on all fronts. As a result, we are confident in our revised 2002 guidance of a range from US$2.44 to US$2.49 per diluted share.”
